Sharp Decline on Wall Street Affects Asian Markets - 2002-09-13

Markets in Asia ended mixed on Friday, with some recovering ground after last week's losses. Analysts say investors were more confident after the anniversary of the September 11 terrorist attacks passed peacefully, but warnings of weakness in the U.S. economy triggered sharp declines on Wall Street, and this was reflected in Asia on Friday.

Taiwan saw some of the greatest gains after last week's selling spree. The Taiex rose almost three percent during the week to end at 4,580.

Japan's benchmark index also ended the week in positive territory, at 9,241, up 1.2 percent from last Friday.

Asia analyst Stuart Patterson of Credit Suisse First Boston says the recoveries come as fears of fresh terrorist attacks on September 11 proved unfounded, while the possibility of war in Iraq has already been factored in.

"The markets are obviously forward-looking and they've been discounting pretty much a worst-case scenario with regard to the potential conflict in the gulf. In terms of the oil price rally, we've seen recently, that's lost its ability to surprise," he said.

In Seoul, the Kospi ended at 718, with a 1.4 percent gain over last week. But falling shares in the United States dampened sentiment in Korea, and the index slid three percent on Friday. Mr. Patterson says there was also a negative impact from news that domestic consumption in Korea is not as resilient as previously believed.

"Domestic consumption has been very strong, but there are worries now about credit quality on the consumer side, and the issue here is how much supply of credit there is going forward," Mr. Patterson said.

Hong Kong's main share index remained below the key psychological level of 10,000. The Hang Seng ended the week at 9,650, down almost one-percent from last week. Shares across all industries suffered. Mr. Patterson says that, in the absence of a strong U.S. recovery, investors in Hong Kong remain skeptical about the territory's economic outlook, despite strong domestic corporate performance.